Cryptocurrencies in India: India must control the use of cryptocurrencies in terrorist financing

by Abhinav Pandya

Today the hallmark of the world order is its general instability and unpredictability, which in the eyes of political philosophers is the essence of postmodernism. This essence of uncertainty is reflected in a myriad of ways and forms that include non-state actors and terrorist organizations that defy sovereignty, cybernetic revolutions that threaten the bases of human security, democracy and law, and artificial intelligence that shakes the very notion of the pre-eminence of the human race. The phenomenon of cryptocurrencies has led to the much feared uncertainty, anonymity and unpredictability in the global financial system.

There was a time when cash could be taken and a transaction carried out without fear of surveillance or monitoring by regulatory agencies. The digitization of the financial system has deprived us of that anonymity and privacy. Cryptocurrencies promise to return our privacy and anonymity. However, it has a huge cost.

Cryptocurrencies have emerged as the most advanced frontiers of terror financing. In 2016, the Ibn Taymiyya media center, an online jihadist unit in Gaza, used social media campaigns to raise money through bitcoins. Earlier, in June 2015, a Virginia teenager was posting instructions on Twitter about donating to IS using bitcoins. In June 2017, the Wall Street Journal reported on the Syrian Indonesian militant who used paypal and bitcoin to finance IS, as claimed by the Indonesian security agencies. A jihadist monitoring website said that a vision of the organization. . al-Sadaqah (in Arabic for volunteering) has solicited funds worth $ 750 in November 2017 for relief efforts in Syria. The Al-Sadaqah campaign was circulating through Al Qaida connected social media channels like Facebook and the Telegram messaging app. In December, Pro-IS websites such as Akhbaar-al-Musalmin ((in Arabic for Muslim news) and Isdarat were soliciting funds through bitcoin donations.

Cryptocurrency or "virtual currency" does not have government support. It has no legal existence in any financial system. It exists under various names like bitcoin, Monero, Ripples and Zcash. Money launders, cyber-criminals and terrorists find cryptocurrencies very attractive because they offer anonymity and no traceability. Provides anonymity in the sense that the user does not have to produce any document to validate his / her identity. In addition, in a bitcoin network, users are identified by an alphanumeric value rather than by their actual name. Furthermore, the transactions are instant and irreversible. Any amount of money can be transferred instantly from anywhere to anywhere concerning the geographical location.

Furthermore, these transactions take place on the dark network. The dark web is an encrypted area of ​​the web with access only to specialized browsers such as TOR (The Onion Router) and Freenet, and cybercriminals use it mostly, money launders, terrorists, dissidents and journalists to avoid detection . On the dark web, terrorists or cybercriminals can buy a variety of things like driving license, passport, bills, guns, bombs and drugs. The "via della seta" web site that existed on the obscure web was a global network of illicit money launders, smugglers and all kinds of criminals.

The anti-terrorism community around the world is perplexed about how to respond to the challenge presented by bitcoins. Furthermore, there are worrying concerns. In the last eight years, the use of bitcoins has increased exponentially from an average of 100 transactions per day in 2009 to 282,000 transactions per day in 2017. Among the millions of bitcoin global transactions, it is difficult to identify the cases of terror. Moreover, the fact that everything happens on the dark web makes it a gigantic challenge.

In the case of India, the state of affairs is rather gloomy. First of all, India is a special case. In the Middle East and Africa, poor internet infrastructure discourages terrorist groups from using bitcoins. However, India has a much better internet infrastructure with regard to equipment, speed and connectivity. Furthermore, IT skills are better. The use of bitcoins is increasing. Zebpay, a bitcoin exchange reported that in the last months of 2017, they were adding 300,000 to 400,000 users on its exchange each month compared to 150,000 in June and July. Furthermore, there already exists a vast thriving network of gray market and underground economy. A few years ago, the cobalt-60 radioactive mineral ended up in the Delhi scrap market, from the University of Delhi and was sold in the gray market of Delhi. Imagine, if all this comes on an online market organized on a darkweb. It will be a walk for terrorist organizations to get dirty bombs.

And, as if this were not enough, the regulatory agencies are poorly qualified, short of personal and archaic. The legal apparatus for controlling bitcoins and computer crimes is not sufficiently developed.

India needs to invest a lot in the training and capacity building of counter-terrorism and money laundering experts to build a specialized framework in addressing the challenge of virtual currencies. Furthermore, India must also develop a solid legal framework to meet this challenge. Currently, although RBI has practically banned all banks from processing in bitcoins or any other form of virtual currency, it will be almost impossible to prevent people from using crypto-currencies in the future. Thus, the high-sounding measures such as the total ban are not intended to track or stop the use of bitcoins for criminal and terrorist activities. Furthermore, cryptocurrencies have enormous potential to make the financial system truly global and at the forefront. Transactions are not delayed or hindered by sovereignty issues, and there is no need to work on paper, complicated documents and procedures. Virtual currencies can be a great resource for the vast population that is under-served by the banking system. It can authentically democratize banking services and save a lot of time and money due to the quick and simple nature of its transactions. Thus, the absolute ban on bitcoins that many countries are doing in the current scenario is not advisable.

Fortunately, the use of cryptocurrencies by terrorist organizations is still in the infancy phase. Many handicaps such as the lack of developed internet infrastructure, the rapidly changing and unpredictable nature of bitcoins, the difficulty of converting them into legal currency and the lack of advanced IT skills prevent the terrorist from using large-scale cryptocurrencies. However, in the future, it will not be the case. The strict supervision of regulatory bodies and the difficulties in using Hawala and formal banking systems can push terrorists and criminals into the virtual currency world. Furthermore, it presents an alarming situation that requires planning and a great effort to develop a robust strategy to prevent the use of cryptocurrency for criminal and terrorist activities.

Abhinav Pandya is a political analyst specializing in anti-terrorism, Indian foreign policy and Af-Pak geopolitics. A graduate in public affairs at Cornell University, he has more than seven years of experience in public policy, anti-terrorism, electoral politics and development in India and the United States.

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